Corporate India might see salary hike of 9.1% in 2026
What's the story
India Inc. expects an average salary hike of 9.1% in 2026, slightly down from the 9.3% increase projected for this year, according to the EY Future of Pay report. The report highlights that Global Capability Centers (GCCs) will lead this growth with an expected increment of 10.4%. This is due to strong global demand and investment in specialized digital capabilities.
Sectoral growth
Financial services, e-commerce, and pharmaceuticals lead salary projections
The financial services sector is expected to witness a salary hike of around 10% in 2026, closely followed by the e-commerce sector with an expected increase of 9.9%. The life sciences and pharmaceuticals sectors are also likely to see a significant salary hike of 9.7%. These numbers indicate a promising outlook for these industries in terms of employee compensation.
Workforce stability
Attrition rates show signs of stabilization
The report also sheds light on attrition trends, showing a gradual stabilization in the workforce market. Overall attrition has decreased to 16.4% in 2025 from 17.5% in 2024, with over 80% of exits being voluntary. This indicates that talent movement is still driven by opportunities rather than restructuring initiatives. Financial services recorded the highest attrition at 24%, particularly across sales, relationship management, and digital roles.
Compensation trends
Shift toward skill-based pay frameworks
The report highlights a shift toward skill-based pay frameworks, with nearly half of surveyed organizations making the transition. Emerging tech roles such as AI, generative AI, and machine learning engineering can command up to 40% skill base premium. This trend shows that companies are increasingly valuing specialized skills in their compensation structures.
Pay structures
Performance-linked compensation on the rise
There's an increase in average variable pay as a percentage of fixed pay, rising to 16.1% in 2025 from 14.8% in 2024. The gap between high and average performers has widened, with top talent earning 120-150% of target payouts while average performers get only 60-80%.
Incentive strategies
Long-term incentive plans gaining traction
Finally, the report highlights a strategic shift in long-term incentive plans (LTIPs) to better balance talent retention, performance alignment, as well as long-term wealth creation. Around 30% of companies now run two or more LTI plans in parallel. The Employee Stock Ownership Plans (ESOPs) continue to be the most popular instrument, with adoption rising to roughly 78% in 2025 from about 71% in 2024.